Our VIP client Daniel sent in a great question that I would like to answer today: “What is the difference between assessed and appraised values? Do those values have an impact on the market value of your home?”

Now, there are three different types of values in real estate: assessed value, appraised value, and market value.

The assessed value is used by your bureau, county, or municipality to determine your property taxes. The assessor uses common appraisal tactics such as neighborhood drive-bys, recorded sales (although sales price is not on the public record in Alaska—we use voluntary sales information), and property tours.

In Alaska, you will get a notice in the mail asking you what you paid for the house and what kind of financing you used. This is voluntary information; you don’t need to fill out the form and you don’t need to invite the assessor into your house. However, if you think your assessed value is too high, it can help to have established communication with the tax assessor.

The assessor takes that value, multiplies it by the mill rate for your area, and subtracts any tax exemptions in order to determine your tax obligation.

The appraised value comes into play when you finance your home purchase through a mortgage. The lender will hire a third-party appraiser to determine the value of the property. The appraiser is the eyes and ears for the mortgage lender; they mitigate the risk for the lender and justify the contract sales price for the loan.

Since the Dodd-Frank Act, there have been many changes in this process and a push to make those appraisals more conservative. As a result, appraisals rely more on an equation rather than local market knowledge; that math problem doesn’t always work because you might be comparing apples to oranges.

The market value of your home is dictated by market conditions like supply and demand and the condition of your home. The market value also depends on your listing agent’s negotiation skills.

Both the assessed and appraised values have impact on the market value. However, the appraisal has much more bearing on market value, especially since 90% of home sales are financed by a lender.

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The appraised value has more of an impact on your market value.

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If an appraisal comes in low, the buyer has the ability and leverage to negotiate the sales price to a lower value. In many cases, the appraisal sets the market value.

If you have any other questions, send me an email. If I answer your question with a video, you will receive a $25 gift certificate. Please don’t hesitate to reach out to me. I look forward to hearing from you!

Why work with us?

Madden Real Estate is a unique concept for the Alaska real estate market. The first of its kind in Alaska, Madden Real Estate (MRE) is a locally owned, team-centric real estate firm specializing in residential, commercial real estate sales and exceptional client service. For the past four years, Madden Real Estate has been ranked as one of the top 50 teams in the U.S. according to the Wall Street Journal.

What our clients have to say

"Our beautiful new home had gone unsold after months on the market with another real estate firm. We turned to The Madden Team, and they enthusiastically showed us what they could do to help us connect with buyers. Within a matter of weeks, a happy new homeowner was moving in!!! We were so pleased with the whole process and can't wait to work with the Madden Team again soon!"

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"Wes Madden and his team went over and above what I expected from an agent. I was offered a new position with my company and needed to sell as soon as possible, to close on another home. Wes imedieatly started the process and got the house listed and helped with setting it up to show. Within 2 weeks we had a full offer and the process went as smooth as expected. Wes's team went far beyond expectations and helped with inspections and setting up appintments for some minor repairs. If you wnat expert help in purchasing or selling a home contact Wes Madden and team."

Client Audio Testimonials

Laura -"First of all, they sold my house very quickly at a fair price. They did all the legwork so I really was able to go to work and focus on what I needed to focus on in my life. They helped me buy a new house and they managed to coordinate both the sale and the purchase of my new house all on the same day. On one occasion Greg Merdes came out at 26 below zero to find the waste vents for our septic system because my husband was unable to do it. And so Greg borrowed his equipment from someone, came out, dug around, and found the waste vents and marked them on his own time and on a Sunday at 26 below zero. He did not have to do that."